U.S. Forecasts Record Heating Prices as Winter Returns

Source: Bloomberg

U.S. households that use heating oil will face record prices this winter as weather forecasters predict colder temperatures in the Northeast after an unusually warm season last year, according to a government report.

The Energy Information Administration, which tracks and analyzes energy data, projects households will spend 19 percent more on average for heating oil and 15 percent more for natural gas from Oct. 1 to March 31, the period covered in its short- term energy and winter fuels outlook released today.

About half of U.S. households use natural gas as their main heating source. While only 6 percent of U.S. homes use heating oil, 80 percent of families that use the fuel are clustered in the northeastern part of the country, according to the EIA.

“The forecast for higher household expenditures primarily reflects a return to roughly normal winter temperatures east of the Rocky Mountains compared with last winter’s unusual warmth,” the report says.

2. That article appears to be complete BS

Straight from the Energy Information Administration, which Bloomberg uses to make the point of record heating costs:

Household natural gas heating demand this winter (October through March) is expected to be up nearly 14%, heating oil up 17%, electricity up 8%, and propane up 17%, according to EIA's Short-Term Energy and Winter Fuels Outlook for the 2012-13 U.S. heating season. While demand is expected to be higher than last winter, consumption is forecast to be less than the five-year average for all the major heating fuels except heating oil.

EIA's forecast for higher household heating demand mainly reflects a much colder winter east of the Rocky Mountains compared with last winter, with heating degree days in the Northeast, Midwest, and South expected to be 20% to 27% greater this winter, according to National Oceanic and Atmospheric Administration's (NOAA) forecast.

So consumption is forcast to be less than the five year average, while heating fuel supplies are plentiful, including record high natural gas inventories. I'm not sure how that equates to "record heating prices" as the Bloomberg article claims. Looks like someone has an agenda.